Analysis: China and Japan seek to dial down tensions, but risks remain

TOKYO/SHANGHAI (Reuters) - Two Japanese F-15s scramble as a Chinese plane nears the disputed islands: one in the lead, the other providing cover.

They issue radio warnings to leave the area, but are ignored.

Visual wing-tipping signals go unheeded.

The Japanese pilots consider their last option: firing warning shots - a step Beijing could consider an act of war.

That's how the risky game being played near a chain of rocky, uninhabited isles at the heart of a row between Beijing and Tokyo could quickly escalate to the danger point, a former Japanese air force pilot said.

"China would be furious. They would regard it as war, although it is not by international law," the ex-pilot said of the depicted scenario in the skies over the East China Sea.

A long-simmering row over the islands, known as the Senkaku in Japan and the Diaoyu in China, has in recent months escalated to the point where both have scrambled fighter jets while patrol ships shadow each other in nearby seas.

Tokyo noted last month that its pilots have the right under global rules to fire warning shots against intruders in its air space, a step Japan has taken only once since World War Two.

Concerns that the increasing cat-and-mouse encounters between planes or patrol ships in the East China Sea will cause an accidental clash are giving impetus to efforts to dial down tensions, including a possible leaders' summit.

But while hopes have emerged of a thaw in the chill that began when Japan bought the islands from a private citizen last September, deep mistrust, regional rivalry and pumped up nationalism complicated by bitter Chinese memories of Japan's wartime aggression mean any rapprochement will be fragile.

"Most likely the two sides will eventually find a face-saving formula to step back from this. But I doubt it's a flash in the pan," said Andy Gilholm of consultancy Control Risks.

"There seems no chance of a permanent settlement and even a durable setting aside of the issue looks very unlikely. So ... we're advising clients that this kind of friction is part of the new normal, not a fleeting storm."

With Japanese businesses suffering from a downturn in trade after violent anti-Japan protests last September and jobs and investment in China at risk if the feud drags on or worsens, the pressure is on to find a resolution of sorts.

Japan's ally the United States, which has shifted its attention to the region in an Asian "pivot", has signaled it does not want to see a military clash over the islands, which Washington says fall under a two-way security pact with Tokyo.

A string of Japanese politicians including Abe's junior coalition partner and former Prime Minister Tomiichi Murayama - a socialist who issued a landmark 1995 apology for Japan's wartime aggression - have visited Beijing in recent weeks.

"These (visits) are being reported in China in an explicit way," said Yoshihide Soeya, director of the Institute of East Asian Studies at Keio University in Tokyo. "China is telling its domestic audience that it is time to try something new."

"NIXON IN CHINA"?

Abe, who returned to Japan's top job in December after his Liberal Democratic Party's (LDP) huge election win, now says he is open to a summit. LDP Vice President Masahiko Komura may travel to China to try to lay the groundwork, although no meeting is expected until after Xi becomes president in March.

Abe moved quickly to repair Sino-Japanese ties when he took office for a first term in 2006 and Japanese executives and some experts say his nationalist image may mean he is well placed to do something similar again, as then-President Richard Nixon's 1972 China visit set the stage to normalize Sino-American ties.

Still, setting the stage for summitry will require deft diplomacy. "Both sides want to lower the heat, but they don't want to look soft to their own nationals," said the Japanese ex-pilot, now an expert on regional security matters.

Abe's predecessor bought the islands, located near potentially big maritime gas reserves, last September to prevent their purchase by the nationalist governor of Tokyo. Beijing rejected Japan's explanation that the move was meant to avoid escalating tensions, and violent protests erupted in China.

Even if the leaders meet, a substantive compromise in which Beijing stops sending ships and planes to the area or Tokyo agrees that the island's sovereignty is disputed looks elusive.

The row over the islands has caused flare-ups with serious economic fallout in years past, but China's stepped up efforts to physically challenge Japan's control - and Japan's decision to push back - has raised the risk to a new level, diplomats say.

Japanese fighters scrambled 160 times between April and October last year, the latest period for which data is available, more than the total in the 12 months to March 2012, and at least eight times since December 13 when a Chinese turbo-prop plane entered what Japan considers its airspace.

Japan's defense minister, Itsunori Onodera, said in January that Japan might fire tracer bullets as warning shots, a step its air force has taken only once since World War Two when a Soviet bomber strayed into its airspace over Okinawa.

That incident ended with an apology by Moscow but any similar episode is unlikely to be so easily settled this time.

Another elevated risk is a possible collision between Japanese and Chinese patrol vessels in the area or a boat of Chinese activists that tries to land on one of the islands.

In a sign that Japan sees the tensions persisting, the defense ministry is considering deploying F-15 fighter jets and patrol planes to another island chain closer to the disputed isles to respond more quickly to Chinese vessels and aircraft.

"At least there are efforts to manage the situation," said former Japanese diplomat Hitoshi Tanaka, head of the Institute for International Strategy in Tokyo. "But the danger remains."

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